Statewide View: Soaring energy prices could derail Minnesota mining’s massive opportunity
Last summer, my organization, the Center of the American Experiment, released a study: "Unearthing Prosperity: How Environmentally Responsible Mining Will Boost Minnesota's Economy." It found that developing Minnesota's copper, nickel, platinum, ...
Last summer, my organization, the Center of the American Experiment, released a study: “Unearthing Prosperity: How Environmentally Responsible Mining Will Boost Minnesota’s Economy.” It found that developing Minnesota’s copper, nickel, platinum, and titanium deposits would add $3.7 billion to the state’s economy each year and support 8,500 new jobs.
Following our recent tribute to Earth Day, now is the perfect time to share the news that new data indicate the economic benefits of developing Minnesota’s mineral resources could be much larger.
When releasing our report last year, we were careful to use the most conservative estimates of Minnesota’s mineral wealth based on publicly available data. We met the strict standards for resource estimates set by the Canadian stock exchange.
Since then, new information has become available that shows expanded non-ferrous mining in our state would create up to 4,667 direct jobs in the mining industry, each paying on average $80,000 per year, and would support 4,912 indirect jobs and 5,271 induced jobs, for a total of 14,851 jobs. All this while boosting Minnesota’s GDP $5.9 billion each year. These numbers come from the economic modeling software IMPLAN, the industry-standard software used by economists.
These numbers are preliminary, and the number of direct mining jobs may be revised downward as specific mining plans are brought forth in the future. But the massive opportunity that environmentally responsible mining brings to our state is undeniable. With the PolyMet mine recently becoming fully permitted, Minnesota could be on the verge of an economic boom - if we are smart about facilitating an inviting business environment.
The outlook for Minnesota’s mining industry is not all rosy, unfortunately. Mines use an enormous amount of electricity. In fact, Minnesota’s iron mines and paper mills used 8 percent of all the electricity generated in the state in 2016. Unfortunately, policies proposed by Gov. Tim Walz and the Minnesota House to increase reliance on wind and solar energy dramatically would increase the cost of this electricity.
According to the latest study released by American Experiment, obtaining just 50 percent of our electricity from wind and solar sources would increase electricity prices by 40 percent, which amounts to an extra cost of nearly $200 million every year for iron mines and paper mills. Because Minnesota’s iron mines produce just 2 percent of global output, such an increase in costs could threaten mining’s viability in a globally competitive marketplace.
As such, rising electricity prices would erode the livelihoods of the approximately 5,300 people who already work in the state’s taconite industry, which contributes approximately $3 billion to Minnesota’s GDP annually. In total, energy policies that put Minnesota miners at a competitive disadvantage threaten to destroy more than 20,000 existing and potential jobs supported by the ferrous and non-ferrous mining industries and reduce Minnesota’s GDP by approximately $9 billion per year.
Most Minnesotans do not realize our state mines 75 percent of the iron produced in the United States and that the earth underneath our feet contains the largest undeveloped deposits of copper, nickel, cobalt, platinum, and palladium in the world. Furthermore, Minnesota’s titanium deposits are the largest in North America. These resources can fuel Minnesota’s economic growth for many years to come, but only if our legislators do not foolishly pursue policies that make it impossible to develop them.
John Hinderaker is president of the Center of the American Experiment, a conservative think tank based in Golden Valley. Minn. He wrote this for the News Tribune.